A Frictionless Model of Job Flows and the Beveridge Curve
AbstractThe Diamond-Mortensen-Pissarides search and matching model is the workhorse of labor macro, but it has difficulty in simultaneously matching the cyclical behavior of job loss and vacancies when taken to the data. By completely ignoring frictions in job creation and focusing instead on firm-level heterogeneity, one can match the cyclical behavior of job flows and vacancies relatively well. In particular, one can generate a Beveridge Curve which looks much like the real Beveridge Curve, and one can replicate the approximately equal contributions of job creation and destruction to the cycle. Focusing on heterogeneity rather than on hiring costs seems to give an improved picture of hiring activity over the cycle
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1636.
Length: 28 pages
Date of creation: Jul 2010
Date of revision:
Find related papers by JEL classification:
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-21 (All new papers)
- NEP-DGE-2010-08-21 (Dynamic General Equilibrium)
- NEP-LAB-2010-08-21 (Labour Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- A Frictionless Model of Job Flows and the Beveridge Curve
by Christian Zimmermann in NEP-DGE blog on 2010-08-23 00:24:52
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